Advanced Communic. Design v. Premier Retail Net.
| Decision Date | 21 February 2002 |
| Docket Number | No. CIV 01-983(DSD/JMM).,CIV 01-983(DSD/JMM). |
| Parties | ADVANCED COMMUNICATION DESIGN, INC., Plaintiff, v. PREMIER RETAIL NETWORKS, INC., Defendant. |
| Court | U.S. District Court — District of Minnesota |
John B. Lunseth II, Esq., Gerald E. Helget, Esq. and Briggs & Morgan, Minneapolis, MN, counsel for plaintiff.
James A. DiBoise, Esq., David J. Berger, Esq., Tracy T. Lane, Esq., Ian D. Chowdhury, Esq. and Wilson, Sonsini, Goodrich & Rosati, Palo Alto, CA 94304 and David P. Pearson, Esq., Winthrop & Weinstine, St. Paul, MN, counsel for defendant.
This matter is before the court on plaintiff's motion for a partial default judgment, plaintiff's motion for a preliminary injunction, defendant's motion for relief from default, defendant's motion for leave to file an answer and counterclaim and plaintiff's motion to strike defendant's answer and counterclaim. Based upon a review of the file, record and proceedings herein, and for the reasons stated, the court grants plaintiff's motion for partial default judgment, grants plaintiff's motion for a preliminary injunction, denies defendant's motion for relief from default, denies defendant's motion for leave to file an answer and counterclaim and grants plaintiff's motion to strike defendant's answer and counterclaim.
Plaintiff Advanced Design Communication, Inc. ("Advanced") is the owner of United States Patent No. 6,133,908 ("the '908 patent" or "patent '908"). Advanced manufactures, advertises and sells the technology and apparatus set forth in the '908 patent ("A/V Preview Apparatus") to various retailers. Advanced's A/V Preview Apparatus is designed to permit a number of consumers to simultaneously preview samples of different video or audio discs. A retail consumer who is interested in purchasing a certain audio/visual product (e.g., a movie, cassette, music video, compact disc or video game) can remove the product from the retailer's display shelf, scan the bar code on the product into the A/V Preview Apparatus and watch and listen to samples of the audio/visual retail product on the A/V Preview Apparatus. (Scibora Aff. at ¶ 6.)
Advanced alleges that defendant Premier Retail Networks, Inc. ("Premier") has produced a product, known as the "Interactive Network," that infringes upon claim 1 of the '908 patent. On February 15, 2001, Advanced's CEO Marco Scibora sent a letter to Charles Nooney, then Premier's President, advising him that Premier was infringing upon the '908 patent. (Scibora Supp. Aff. at ¶ 4.) On March 7, 2001, Jeffrey Cohen, then Premier's Chief Executive Officer, called Scibora to talk about the letter. (Scibora Supp. Aff. at ¶ 5). Cohen and Scibora discussed resolving the dispute without litigation. (Id.) On April 9, 2001, representatives of Premier and Advanced held a telephone conference so that Advanced could learn more about Premier's product. Sean Moran and Paul Davis, of the Wilson Sonsini law firm, represented Premier.
On April 12, 2001, Scibora met with Cohen and Moran to discuss a potential business resolution of the dispute. (Scibora Supp. Aff. at ¶ 17.) Advanced alleges that Scibora told Cohen that he would consider an agreement releasing Premier from any claims of infringement if, and only if, Premier and Advanced were able to reach a "viable and beneficial business resolution." (Id.) Advanced asserts that Scibora and Cohen shook hands upon that understanding (id.), while Premier contends that the parties shook hands upon Cohen's promise to refrain from suing Premier on the '908 patent (Cohen Aff. at ¶ 3; Moran Aff. at ¶ 6).
On April 20, 2001, Gerald E. Helget and Nelson R. Capes, as patent counsel for Advanced, together with Scibora, telephoned Moran and Davis, Premier's attorney, to determine the structure and function of Premier's Interactive Network. (Helget Aff., ¶ 2; Scibora Aff., ¶ 11.) From this telephone conversation Advanced determined that Premier's Interactive Network infringed upon claim 1 of the '908 patent.
On May 3, 2001, Helget, representing Advanced, delivered a letter to Davis that provided a written description of Premier's alleged infringement and that offered to resolve the dispute amicably. Neither Advanced nor Helget received a response to the letter. (Helget Aff. ¶¶ 6-7.) Helget subsequently called Davis but Davis never returned Helget's telephone call. (Id.) On June 21, 2001, Michael M. Lafeber, an attorney for Advanced, wrote a letter to Davis requesting a response to the May 3, 2001 letter. Neither Davis nor anyone from Premier responded to Lafeber's letter. (Lafeber Aff. at ¶ 8.)
Previously, on June 1, 2001, counsel for Advanced filed but did not serve a complaint with the United States District Court for the District of Minnesota alleging that Premier infringed upon the '908 patent. Art Songey, Premier's Chief Financial Officer, received notice of the filing from a law firm solicitation letter dated June 12, 2001. (Lunseth Aff., Ex. C, Songey Dep. at 18) On August 7, 2001, Scibora wrote a letter to Cohen advising him that Advanced had filed a complaint and that Premier's attorney had not responded to communication from Advanced's counsel. (Scibora Supp. Aff. at ¶ 26; see Scibora Supp. Aff., Ex. H.) Scibora notified Cohen that Advanced would proceed with the litigation if Premier did not respond by August 16, 2001. (Id.)
Premier was served with the summons and complaint on August 21, 2001. Premier failed to submit an answer or otherwise defend or appear in this action by the time required under Rule 12 of the Federal Rules of Civil Procedure. On September 25, 2001, Advanced's attorneys contacted attorney Davis at Wilson Sonsini to inquire whether Premier would file an answer and told Davis that the answer was overdue. (Lafeber Aff. at ¶ 6.) Davis stated that he knew that the complaint had been filed but did not say whether Premier would respond. (Id.)
Advanced subsequently applied to the district court clerk for an entry of default pursuant to Fed.R.Civ.P. 55(a), which was entered on September 26, 2001. (Id. at ¶ 7.) Advanced now moves for partial default judgment, for a preliminary injunction, and to strike defendant's answer and counterclaim. Premier moves for relief from default and for leave to file an answer and counterclaim. The court grants plaintiff's motion for partial default judgment, grants plaintiff's motion for a preliminary injunction, denies defendant's motion for relief from default, denies defendant's motion for leave to file an answer and counterclaim and grants plaintiff's motion to strike defendant's answer and counterclaim.
Defendant requests that the court set aside the entry of default pursuant to Federal Rule of Civil Procedure 55(c), while plaintiff requests that the court enter default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). The court denies defendant's motion and grants plaintiff's motion.
While courts generally disfavor the entry of default, defaults serve important public policy interests:
Both the default entry and judgment play an important role in the maintenance of an orderly, efficient judicial system. They are significant weapons for enforcing compliance with the rules of procedure and therefore facilitate the speedy determination of litigation. The default procedure offers a useful remedy to a good faith litigant who is confronted by an obstructionist adversary.... [I]f default is to be an effective sanction, relief under Rule 55(c) cannot be granted too readily.
10A Wright, Miller and Kane, Federal Practice and Procedure, § 2693 (West Group 1998); see also Gray v. John Jovino Co., 84 F.R.D. 46, 47 (E.D.Tenn.1979). The court has discretion in granting a motion for relief from entry of default. See Wright, Miller, and Kane, Federal Practice and Procedure at § 2693.
Federal Rule of Civil Procedure 55(c) provides that a court may grant relief from entry of default for "good cause shown." The principle factors in determining whether to grant relief from entry of default under the "good cause" standard include (1) whether the default was the result of defendant's culpable conduct, (2) whether plaintiff would be prejudiced if the default is set aside and (3) whether defendant presented a meritorious defense. In re Dierschke, 975 F.2d 181, 183 (5th Cir.1992); Farnese v. Bagnasco, 687 F.2d 761, 764 (3d Cir.1982); Porter v. Brancato, 171 F.R.D. 303, 304 (D.Kan. 1997); Hunt v. Kling Motor Co., 841 F.Supp. 1098, 1105-06 (D.Kan.1993). The court need not consider all three factors. Porter, 171 F.R.D. at 304. If the default is the result of defendant's culpable conduct, then the district court may refuse to set aside the default on that basis alone. See, e.g., id.; In re Dierschke, 975 F.2d at 184; Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir.1988).
Courts consistently deny relief from a default when the default results from the defendant's willful, intentional conduct. See, e.g., Porter, 171 F.R.D. at 304 (); Hunt v. Kling Motor Co., 841 F.Supp. 1098, 1106 (D.Kan. 1993) (); Bentley v. Raveh, 151 F.R.D. 515, 519 (D.Conn.1993) (); Standard Chartered Bank v. Red Rock Commodities Ltd., 151 F.R.D. 261, 262 (S.D.N.Y.1993) (); Clee v. Remillard Building, Inc., 649 F.Supp. 1127, 1130 (D.Conn.1986) (...
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...184 (5th Cir. 1992); Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388 (9th Cir. 1988). Advanced Communication Design, Inc. v. Premier Retail Networks, Inc., 186 F. Supp.2d 1009, 1015 (D.Minn. 2002); see also Johnson, 140 F.3d at 785 ("The court need not consider all three factors."); Vin......